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Bush reveals new steps to steady banking industry

President Bush on Tuesday announced a $250
billion plan by the government to directly buy shares in the
nation's leading banks, saying the drastic steps were "not
intended to take over the free market but to preserve it."

Nine major banks will participate initally including all of the
country's largest institutions. Some of the big banks had to be
pressured to participate in the program by Treasury Secretary Henry
Paulson, who wanted healthy institutions that did not necessarily
need capital from the government to go first as a way of removing
any stigma that might be associated with banks getting bailouts.

Bush, in brief remarks in the Rose Garden of the White House,
said the government will initially buy stocks in nine major U.S.
banks.

"These efforts are designed to directly benefit the American
people by stabilizing the financial system and helping the economy
recover," he said.

Paulson, at a news conference a short time later, said "today's
actions are what we must do to restore confidence in our financial
system."

"We regret having to take these actions," said Paulson.
"Today's actions are not what we ever wanted to do - but today's
actions are what we must do to restore confidence to our financial
system."

The Federal Reserve, meanwhile, announced Tuesday that it will
begin buying massive amounts of short-term debt on Oct. 27 - its
latest effort to break through a credit clog. The Fed is invoking
Depression-era emergency powers to buy commercial paper - a crucial
short-term funding that many companies rely on to pay their workers
and buy supplies. Last week the Fed said it intended to take the
action but didn't specify when.

Fed Chairman Ben Bernanke welcomed all the new steps and said he
believes they will help ease problems plaguing financial markets
and threatening the economy. However, he also made clear that
policymakers would continue to take actions as needed to battle the
crisis.

"Our strategy will continue to evolve and be refined as we
adapt to new developments and the inevitable set backs," he said.
"But we will not stand down until we have achieved our goals of
repairing and reforming our financial system and thereby restoring
prosperity to our economy."